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Policy & Regulation News

CMS Extends $3B Medicaid Eligibility and Enrollment Funding

April 23, 2015 - The Centers for Medicare & Medicaid Services (CMS) released a proposed rule on April 16, 2015 to extend access to enhanced federal financial participation for Medicaid eligibility and enrollment (E&E) systems beyond the formerly implemented deadline of December 31, 2015. Increased funding is available for state projects observing various updated criteria and conditions for such Medicaid eligibility systems.

CMS’ proposed rule modifies the regulatory definition of Medicaid mechanized claims processing and information retrieval systems to actively incorporate Medicaid E&E systems. As a result, E&E systems will be associated with the enhanced federal financial participation (FFP), according to the Social Security Act.

CMS additionally proposes to increase the federal matching rate for state E&E systems. Regarding the costs of such systems at a 90 percent federal matching rate for design and development activities, from 50 percent, and a 75 percent federal matching rate, from 50 percent, for maintenance and operations activities, enhanced FFP will be available via specific circumstances. Although the funding increase was initially supposed to expire at the end of this year, CMS proposes to stabilize and extend the aid.

There are two primary objectives for the supplemental time and additional funding as part of a state’s mechanized claims processing system, according to CMS. First, states will hopefully more easily complete modernized systems. Second, such an initiative supports the structurally evolving elements of Medicaid eligibility, Medicaid enrollment, and delivery system needs. Additionally, CMS proposes changes to the standards and conditions applicable to the inclusion of E&E systems.

CMS proposes to assist states in permanently implementing and maintaining Medicaid eligibility and enrollment systems. According to CMS, 9 states have “relatively new” E&E systems that do not need to be completely replaced. Such systems, however, do require modular improvements and upgrades, says CMS. It is expected these states will continue to implement these needed upgrades, according to CMS. All other states are expected to utilize the funding. As a result of the extended match rates, CMS additionally anticipates 28 states will retire their legacy systems.

Time is of the essence. “We believe that most states have not had sufficient time to complete the total system replacement for both MAGI and non-MAGI eligibility functionality,” confirms CMS within the proposed rule. “We assume that an additional 28 states will quickly move forward to retire their legacy E&E systems with ongoing 90 percent FFP for design and development.”

The aforementioned news follows CMS’ earlier intention to make the aid permanent via a proposal to establish a formal policy. Previously established data within this announcement was not quite accurate, as similar data has been adjusted to reflect vastly different numbers. Earlier estimates confirmed higher rates would cost the federal government over $1 billion between 2011 and 2015. More recent estimates confirm implementation of the proposed regulation will cost $3 billion between 2016 and 2025.

The push for modernization is real. According to CMS’ proposed rule, "Without ongoing enhanced federal funding, state Medicaid eligibility and enrollment systems are likely to become out of date and would not be able to coordinate with, and further the purposes of, the overall mechanized claims processing and information retrieval systems."

CMS’ financial contribution of $3 billion will likely help states build and upgrade their Medicaid enrollment systems which will improve the healthcare industry at large.